This ASX company with 190% profit growth pays a MASSIVE dividend yield

Growth and dividends are stereotypically seen as qualities that are incompatible within the same stock.

ASX shares considered high growth usually represent companies that plough their spare cash back into the business to fuel expansion. 

On the other hand, companies that are high dividend payers can afford to do that because they’re not reinvesting it back into growth.

So what happens when you come across a business that’s both growing and handing out a fat yield?

You buy it and hold on for dear life.

ASX share with ‘impressive financial results’

That’s exactly what Cyan Investment Management is doing with construction materials provider Big River Industries Ltd (ASX: BRI).

Portfolio managers Dean Fergie and Graeme Carson told their clients in a memo that Big River’s reporting season update was pleasing.

“Building products manufacturer and distributor Big River was… [a] holding that produced impressive financial results, with FY22 revenues rising 45% to $409 million and underlying profitability up 191% to $22.7 million.”

The market pushed the stock price up 11% over August.

Then came the cream on top.

“Shareholders were rewarded with a final dividend of 10.0 cents per share, taking the full year payout to 15.5 cents, which equates to a ~7% fully franked yield.”

Despite this August party, the Cyan portfolio managers are holding onto the stock for further growth.

“After meeting with Big River this week, the company does not consider FY22 to be a ‘one-off’ with business momentum and margin expansion continuing into FY23.”

Strength in a volatile year

In a year when most non-mining stocks have been hammered, the Big River share price has shown remarkable resilience. The stock is flat over the past 12 months.

Analyst coverage of the company, with a market capitalisation of $178 million, is sparse. 

But according to CMC Markets, at least the team at Moelis Australia agree with Fergie and Carson, rating Big River as a strong buy.

The post This ASX company with 190% profit growth pays a MASSIVE dividend yield appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Fund manager names 4 emerging trends that could result in ‘markedly improved’ performance
• Guess which little-known ASX share is rocketing 30% on ‘outstanding growth’

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/ej90MKL